Young people earning money above and beyond their living expenses face a choice: pay down their tertiary education debt or invest?
While everybody has their own unique circumstances, there are a few key things to keep in mind.
If you undertook your tertiary education on a Commonwealth-supported place (CSP), you’ll likely have received a helping hand from the government in the form of a HELP loan. Your HELP debt is the money borrowed from the government to undertake tertiary education. That covers loans labeled as HECS-HELP, FEE-HELP, VET FEE-HELP, OS-HELP, SA-HELP and VET student loans.
This money is paid back depending on your level of taxable income. If you earn less than $47,014, you don’t pay anything. Between $47,014 and $54,282, you’ll pay back 1% of your taxable income annually, which increases incrementally through to 10% for those earning over $137,898.
According to the Australian Taxation Office (ATO), almost 3 million people had an outstanding HELP debt at the end of the 2019-20 financial year. The average amount was $23,280, up from $22,425 in 2018-19.
The time taken to repay HELP debts has also been increasing, reaching 9.3 years in 2019-20, up from 9.2 years in 2018-19. See table, page 72.
HELP debt is cheap, maybe the cheapest debt you can get. Unlike other types of loans, HELP debt does not incur an interest charge.
But the amount owed does increase. HELP debt is indexed to inflation, as measured by the consumer price index (CPI). CPI is currently 1.1%, next to nothing, so in a way, this figure could be treated as the annual interest charge on the loan.
Esta historia es de la edición August 2021 de Money Magazine Australia.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición August 2021 de Money Magazine Australia.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor? Conectar
An outrageous, beautiful monopoly
Telstra's mobile business is a cash machine with few competitors, giving it the highest returns in the world.
Drop the anchor to judge value
Buying and selling decisions should be based on where a stock price is going, not where it has been.
Powering the AI boom
Beyond the software and chipmakers, where will the energy come from?
Get into life
Tucked inside super are products that can protect you from life's inevitable uncertainties.
Paths to home ownership
Taking the road less travelled can sometimes deliver unexpected benefits.
Sold! Quick ways to add value
Small, strategic changes can have a big impact on the look and feel of your home. And get you a better price on auction day.
Money lessons the kids need to know
Your children can learn a lot from your past money mishaps. Here are eight financial conversations I have had with mine.
Property-investing rules: are they likely to change?
The pressure for the government to curb the tax benefits of tax concessions, such as negative gearing and the capital gains tax discount, is unrelenting. Most recently, independent senators David Pocock and Jacqui Lambie proposed five options for paring back investment property tax concessions, with savings to the Federal budget of up to $60 billion over the next decade.
What's love got to do with it?
A rollercoaster of emotions could be driving poor crypto behaviour.
Are we ready to be cash-free?
Saying goodbye to our piggy banks too soon could leave small businesses in the dark when problems arise.